Helder Mello Guimaraes https://goldbroker.com/news/authors/helder-mello-guimaraes In the absence of a major bullish catalyst, with interest rate expectations on the rise and stock market indices at or near record highs globally, gold has been consolidating since the intermediate high posted in early September. That high, set just after speeches by the Fed’s Mester, Dudley and George and immediately prior to the beginning of the central bank’s blackout period on September 9th, incidentally coincided with lows on the US dollar and 10-year Treasury yields. Since then, fixed income markets moved from pricing a 69% probability of no change and 31% chance of another hike by the end of the year to almost fully pricing in a 25-basis point move in December (i.e. 96.7% probability of a target rate of 1.25%-1.50% in December). Source: CME True to its strong negative correlation with government bond yields and the currency (especially with USDJPY) at the moment, the rise in rates and ensuing dollar strength put pressure on gold prices. These correlation... Tue, 07 Nov 2017 21:02:39 +0000 https://goldbroker.com/news/fed-dollar-drive-short-term-pullback-gold-1224 After posting a solid performance over the summer, gold is on the verge of testing what can be considered major technical resistance around $1378. The precious metal may be about to get its shine back in a big way, as a number of significant technical developments suggest a strong potential for the resumption of the bullish medium- and long-term trend. RISING VOLUME AND OPEN INTEREST MEANS INCREASING DEMAND Spurred on by geopolitical tensions in the Korean Peninsula along with lower interest rate expectations in the US and a weaker dollar, trading on COMEX futures reached a record volume of over 6.8 million contracts in August. The uptrend in volume, which interestingly started in December 2015 just as the Fed began its interest rate “lift-off”, is clearly a positive signal for the precious metal given the bullish trend in prices, as demonstrated by past bull markets and as generally accepted by most technical analysts. Notice for instance the uptrend in volume during... Tue, 19 Sep 2017 16:55:28 +0000 https://goldbroker.com/news/strong-technicals-is-the-new-bull-market-for-gold-at-hand-1193 In the past few weeks, a coordinated barrage of hawkish comments by central bankers of some of the world’s most advanced economies have pushed long-term bond yields higher, clearly weighing on gold prices. At the annual ECB forum in Sintra, Portugal, President Mario Draghi talked about a strengthening and broadening global recovery supporting nascent reflationary forces in Europe. At the same conference, Bank of England Governor Mark Carney mentioned the possibility of removing monetary stimulus soon if economic slack continues to lessen, and Governor Stephen Poloz’s comments about absorbing excess capacity in Canada were perceived as a hint of an imminent rate hike, delivered last week. The concerted effort, driven by growing optimism about a global economic recovery taking root after a lackluster 2016, had a noticeable impact on fixed income with global bond prices dropping markedly. Yields on 10-year government bonds have risen sharply in the US, Canada, Germany, the... Wed, 19 Jul 2017 17:34:54 +0000 https://goldbroker.com/news/global-bond-yields-still-favorable-for-gold-despite-hawkish-rhetoric-1158 After nearly a year of surprising political developments, odds-on-favorite Emmanuel Macron’s victory in France last month was a welcome change and a relief for many. As the the United Kingdom general election took place last week and with negotiations with the EU expected to begin later this month, the issue of whether Brexit will be of the “soft” or “hard” variety remains in the foreground. The Eurozone project has long had its fair share of detractors, and for many Eurosceptics the Brexit referendum last year further reinforced the view that the eurozone is destined to fail. To be sure, there’s nothing really new about this. Back when the European Currency Unit (“ecu”) was officially replaced by the euro in January 1999, I was in my first year of university in the UK. In those days, Labour was in power and Prime Minister Tony Blair’s europhilia was juxtaposed with the “five economic tests” set by then-Chancellor Gordon Brown, who was far less enthusiastic about the eu... Wed, 14 Jun 2017 16:08:15 +0000 https://goldbroker.com/news/gold-in-euro-with-10-year-horizon-only-positive-returns-1134 On Friday, both the S&P 500 and the Nasdaq composite indices closed at record highs in the US, with the Dow Jones Industrial Average only a whisker away from its peak set in March. What has often been called the “most hated bull market in history” continues thus far to chug along in defiance of its detractors. There are certainly plenty of reasons to believe US equities are overvalued and that stocks may be reaching a major cyclical high. Equity valuations are not cheap by almost any measure, real GDP growth remains at a tepid 2% YoY pace, and short-term interest rates are finally on the rise. While there is always the possibility that a major bullish move may be in the works for stocks, potentially on the back of “Trumponomics”, it is well worth considering at this juncture what Warren Buffett once called “probably the best single measure of where valuations stand at any given moment”. The ratio of total stock market capitalization to GDP, a favored indicator... Tue, 09 May 2017 15:26:41 +0000 https://goldbroker.com/news/what-is-the-warren-buffett-indicator-saying-about-gold-1119 In “Post-Fed Rally: Good as Gold”, I concluded that gold futures prices looked “poised to shape a new upleg and test $1281 in coming weeks”. The level, corresponding to both a 61.8% Fibonacci retracement and a 61.8% target, constituted a fairly significant technical resistance and bypassing this threshold is a notable bullish development. Over the past few weeks several political and geopolitical factors goaded safe haven assets higher, providing a particularly positive environment for gold and helping to push it past this fairly important resistance. GEOPOLITICAL FACTORS IN THE DRIVER’S SEAT Geopolitical tensions have escalated significantly recently, particularly over Syria and North Korea. Following a chemical weapons attack on April 4 ascribed by the US to the al-Assad regime, President Trump ordered the first direct military strikes against the Syrian government on April 6. On the day prior to the US bombing, Trump’s comments at a press conference with King A... Tue, 18 Apr 2017 16:30:08 +0000 https://goldbroker.com/news/gold-continues-to-trump-resistance-on-geopolitical-tensions-1109 For the third consecutive time since the tightening cycle began in December 2015, gold rallied on the back of a Fed hike. In fact, in what resembled a relief rally, all asset classes reacted positively in the immediate aftermath of the Fed decision and the publication of the projection materials, which include the “dotplot”. Commodities, stocks, bonds, and emerging markets generally benefited as the US dollar sold off. The initial euphoria may be at least partially attributable to what was perceived as a relatively dovish Fed, at least compared to market expectations. After Fed members clearly signaled the March hike in the weeks leading up to the meeting, markets became increasingly concerned about the possibility of a more-hawkish pace of four hikes in 2017, along with upward revisions in the forecasts for inflation and interest rates. In the absence of any significant changes to the projections and with three hikes penciled in for 2017, the USD and Treasury yields mo... Wed, 22 Mar 2017 20:15:00 +0000 https://goldbroker.com/news/post-fed-rally-good-as-gold-1100 After a challenging Q4 in 2016 in a context of rising bond yields and a stronger US dollar, gold seems to be getting its shine back in Q1. The technical picture is beginning to look a little more constructive and the “reflation trade”, spurred on further by expectations of higher infrastructure spending and tax cuts in the US, has thus far also benefited gold. From a technical perspective, there are indications that the low at $1045.40, incidentally printed just ahead of the first Fed hike in December 2015, was significant and now provides medium-term support as indicated by the price channel in the chart below. The zone provided significant resistance in 2008 and throughout much of 2009, and following the upside breakout provided solid support on the pullback in early 2010. It also corresponds to the 50% retracement of the uptrend from the July 1999 low at $253.2 to the high at $1923.7 in September 2011. Yet another reason that low appears significant is the presence... Tue, 07 Mar 2017 23:01:41 +0000 https://goldbroker.com/news/fed-hike-in-march-may-not-be-bad-news-for-gold-1091